Nonprofit turns to outsourcing to transform finance foundation
AMCHP sees significant improvements from cash flow to culture
CASE STUDY |
Nonprofit organizations typically have a small margin for error when managing their finances. Any hiccup or irregularity can threaten operations or overall sustainability, and when issues arise, correcting course can be difficult. Recently, The Association of Maternal and Child Health Programs (AMCHP) faced some significant challenges within its financial processes, but made some key process adjustments and leveraged timely advice and support to get back on track.
AMCHP is a nonprofit organization, incorporated and located in Washington. The organization was established to provide leadership to assure the health and well-being of all women, children and adolescents, including those with special health care needs, and their families. AMCHP members administer critical public health education and screening services, and coordinate preventive, primary and specialty care.
Former AMCHP CEO Jonathan Webb was relatively new to the organization, but it did not take him long to realize that the finance function was not where it needed to be to best achieve the organization’s mission. Processes were cumbersome and inefficient, there was a major backlog in getting up-to-date financial information, and the organization had a lack of confidence in reporting.
Process inefficiency and leadership issues require a change
Many finance processes were paper-based, which caused several efficiency problems. Other systems were automated, but didn’t talk to each other, requiring manual efforts to consolidate information.
“I was not getting the financial information at the speed that I needed, and we had difficulty closing monthly financials. I was not pleased with that,” said Webb. “I had some processes that needed to be more efficient and transparent, and the in-house team was having a difficult time meeting the needs of the organization.”
Ultimately, the issues with the finance and accounting department started with the head of that group, as the individual who led the function was not strategic and was seen as an impediment to progress. The tone that was set was counterproductive, leading to difficulty motivating and developing staff, as well as creating culture concerns that were spilling out into other areas of the organization.
It became apparent that a change was necessary. AMCHP initially brought in some temporary resources and support, but decided that a more formal approach to outsourcing was likely the best path forward.
“We tried a number of things and got to a place where I just needed to get a firm that could come in with its way of thinking to really right the ship,” said Webb. “I had a pretty good sense of what we needed, but I am not an accountant. So it was important for me to engage those who knew more than I did.”
AMCHP initiated a request for proposal process for an assessment of its accounting operations, and the choices made there helped to lay the foundation for a more successful financial future. After that process, the organization chose RSM to help stabilize and advance the organization’s back-office functions.
RSM’s assessment took the pulse of AMCHP’s finance and accounting function and determined where issues existed. From that initial assessment, RSM performed some work to help AMCHP get caught up, and the rapport built during those projects turned into a long-term relationship.
More automated, aligned financial processes
To gain a better understanding of finances and to make more effective decisions moving forward, AMCHP knew that it needed a more effective, aligned back-office framework. The paper-based processes and disparate technology applications were stifling progress, and they needed to go.
AMCHP and RSM worked together to implement a finance and accounting outsourcing platform to increase financial integration, visibility and efficiency. The new FAO framework included Sage Intacct for financial management in the cloud, bill.com for automated billing and invoicing, and Tallie for simplified expense reporting.
“All of the systems are now tied together and communicating well,” said Webb. “Staff members can get what they need in half of the time, and they are very pleased about how easy it is to access all of those systems and find what they are looking for.”
Increased audit efficiency and accuracy
When RSM took over, AMCHP was in the midst of an audit that, due to the previous process inefficiencies and having to go back and do a lot of cleaning up and closing out, took nearly eight months. RSM helped guide the organization through finalizing that audit, but also implemented several steps and processes that enabled AMCHP to conduct a much more efficient close process moving forward.
“RSM was completely different—night and day different—than what the team was used to,” said Webb. “They were professional; they were courteous; they were engaged and they felt like team members. They were accessible. So as they were helping me clean up the accounting, they were also helping me to establish the culture I was looking to create.”
In contrast, AMCHP’s next audit showed significant progress—it took five weeks and required roughly half of the hours to complete as the previous year. In addition, the most recent audit was completely clean, with no citations compared to a few citations that took time to address during the previous year’s audit. AMCHP went from being several months behind and closing months out to being able to close out a month in advance.
“That might sound like a small feat for some, but it was a huge accomplishment for us because we were so far behind,” commented Webb.
Process efficiency leads to improved cash flow
The new finance and accounting foundation at AMCHP has not only had a positive impact on internal employees and stakeholders, but also to funders of the organization. For example, the organization has strengthened cash flow, as a quicker close process has led to faster access to federal funds and invoice distribution. Employees can now communicate back to funders in a timelier fashion, so those relationships have become even stronger.
“Because we were closing months out faster, we were able to bill our federal funders and foundation funders more efficiently,” said Webb. “So our cash flow has improved tremendously.”
A more effective path forward
Early in the engagement, AMCHP and RSM worked together on a five-year projection to detail the positive changes that would take place within the organization over time. Through RSM’s FAO implementation and the team’s work with an internal resource at AMCHP to enhance processes and improve the culture, the organization quickly realized many of those goals. With this relationship in place, the nonprofit is in a much better place for sustained, long-term success.
“When we started working professionally with RSM, our books were months behind; our system was manual, cumbersome and inefficient, and that situation had a negative impact on the culture I was hoping to create,” said Webb. “Now, the books are up to date; invoices are getting out and back in a timely fashion; our systems are much improved and much more efficient, and the internal culture of the organization and the accounting department is completely different. This was one of the best decisions I’ve made.”